Companies Reporting: Taylor Wimpey, Barclays, Amazon, Apple

Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 25 to 29 April.

• Forward sales at Taylor Wimpey will be a key indicator of how much buyers have left in the tank
• Watching for progress on Cloud profitability at Alphabet will be key
• Will Meta’s shares continue to be unloved?
• We should find out if Barclays’ mis-selling scandal has resulted in any further costs
• Chinese supply disruption could take some of the shine off Apple’s outlook statement
• Digging into rising operating costs will be a priority at Amazon

Taylor Wimpey, Trading Statement, Tuesday 26 April

Matt Britzman, Equity Analyst “Press in recent weeks has been focused on issues around cladding, as the government looks to lock in plans to have developers cover the remedial costs. At the start of April, Taylor Wimpey committed to bringing all affected apartment buildings over 11 metres up to scratch.

The group had already set aside £165m for improvements on buildings built in the last 20 years, and this pledge extends that to 30 years with an added cost expected in the region of £80m. That’ll weigh on cash flow for the year and we hope to get new guidance on year end net cash, which was previously expected to be around £600m.

There’s two key bits of information to look out for. The first is forward sales, at the last update the group was 47% forward sold for 2022. Any update there will be a telling indication of how much buyers have left in the tank in the wake of higher house prices, a cost-of-living crises and rising interest rates. The second will be on build cost inflation, seen at 6% back in March, it’ll be interesting to hear how that’s evolving given progress toward operating margins of 21-22% is key.”

• Find out why we have added Taylor Wimpey to our picks this month

Alphabet, Q1 Results, Tuesday 26 April

Sophie Lund-Yates, Equity Analyst “Google parent, Alphabet, is an advertising powerhouse, and despite the other projects and divisions, this won’t have changed. Ad revenues are slated to rise close to 23% in the first quarter, and any disappointment on that front won’t be well received. An inflationary environment means companies are likely to be looking to save on costs, and digital advertising is cheaper than TV ads or billboards, so this may well be acting as a tailwind. Apart from this, watching out for progress on Cloud profitability is key. This is an exciting growth driver, and progress should be showing.”

Meta, Q1 Results, Wednesday 27 April

Sophie Lund-Yates, Equity Analyst “Meta’s had a difficult time of it lately, with the shares unloved in the sector. Some of that is down to the wider tech sell off, but a large chunk came from slowing revenue expectations. The exceptional demand seen in prior periods means this is somewhat understandable, but it doesn’t match up to everyone else in the digital ad space. The reasons behind that could hint at Facebook’s reduced potency in the age of TikTok, but it would be wrong to dismiss this social media giant. Its current valuation makes it an interesting option for tech investors.”

Barclays, Q1 Results, Thursday 28 April

Sophie Lund-Yates, Equity Analyst “Barclays has been rocked by its admission it mis-sold US securities back in 2019, which will result in the group losing about £450m. An independent review is underway, and regulators are asking questions. We’ll be keeping a close eye out for any information on this next week and hoping the original bill hasn’t grown.

Away from the public blunder, it’s expected that Barclay’s diversified income stream model has held it in good stead. Its trading arm should have benefitted from recent market volatility, while rising interest rates should be good news for the traditional banking business. However, credit balances could look different. At the last update, consumers were starting to spend on credit at an increased rate as the world recovered from lockdowns. With inflation soaring, more people are turning to borrowing to help pay the bills, but this could lead to an increase in bad debts if inflation isn’t transitory. For that reason, the outlook statement will be read with interest.”

Apple, Q2 Results, Thursday 28 April

Sophie Lund-Yates, Equity Analyst “The biggest news where Apple is concerned is Chinese supply chain disruption. Some negative commentary on this is expected, but ultimately don’t think the long-term investment case has been derailed.

Right now, quarterly revenues are expected to rise around 5%. That’s lower than some would like and the drag is likely to continue into Q3, with the market likely to respond negatively to a worse-than-expected outlook. While that’s disappointing, Apple handled early lockdown disruption well back in 2020, and its huge scale should hold it in good stead once more, but of course nothing’s guaranteed.

More important for the big picture is how well new models have been received, and how rapidly the lucrative Services division is expanding. This is especially pertinent in today’s high-inflation world, as discretionary spending takes a hit.”

Amazon, Q1 Results, Thursday 28 April

Sophie Lund-Yates, Equity Analyst “Following regulatory approval, Amazon has acquired MGM studios in a deal worth $8.5bn. MGM comes with over 4,000 film titles and 17,000 TV episodes and is expected to sit within Prime Video. Following Netflix’s very disappointing subscriber numbers this quarter, the pressure is on for Prime Video.

This comes as Amazon works to bulk out its Services offerings, including Prime and the highly lucrative – and exciting growth lever – AWS. That’s because rising operating costs are outpacing revenue – reflecting increased investment in fulfilment capacity, higher wages and some effects from supply chain disruption. Some of that cost may be temporary, but a lot will linger. Digging deeper into this will be a priority when we get quarterly results. Margin movements have been very unfavourable, but I’d argue the market’s reaction has been overly severe.”

• Find out more about these stocks with Hargreaves Lansdown

FTSE 100, FTSE 250 and selected other companies scheduled to report

This article is brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.

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